In Depth

Because the principles of full faith and credit required a Clark Circuit court to consider the judgments of a Kentucky court
involving the default of promissory notes on property in Kentucky and Indiana, there was no error by the Indiana court in
granting a bank the right to foreclose.

Robert and Beverly Setree obtained three promissory notes from River City Bank, which were secured by mortgages on real estate
they owned in Jeffersonville, Ind., and Louisville, Ky. The Setrees failed to pay Indiana real estate taxes on a property,
bringing them in default of the terms of a 2007 note. By not paying the taxes on the property, it triggered River City’s
right to accelerate all debts due and owed under the other notes and foreclose on all the mortgages it held on the Setrees’
various properties.

Two actions were started in Clark Circuit Court and two in Jefferson Circuit Court in Kentucky. The Kentucky court entered
a final judgment and ordered the sale of two Kentucky properties.

At issue in this case is the Clark Circuit Court grant of River City’s motion for summary judgment to foreclose on
an Indiana property entered after the Kentucky court ruled. The Indiana court ruled that res judicata prevented the relitigation
of the Setrees’ default on the 2007 note and mortgage.

The Court of Appeals agreed that the Kentucky judgments had acquired subject matter jurisdiction and personal jurisdiction
over the parties before it, so it must afford full faith and credit to those opinions.

“The same issues—the Setrees’ failure to pay Indiana property tax pursuant to their 2007 Note and their
right to cure—between the same parties—the Setrees and River City—governed the Kentucky cases and this appeal.
River City’s right to foreclose on all three notes was triggered as a result of the Setrees’ failure to pay their
Indiana taxes on the Cardinal Lane Property,” she wrote.

“Because of cross-default provisions in the three notes executed between the Setrees and River City, the Setrees’
default under the 2007 Note constituted a default under the previously executed two notes as well. Therefore, the Kentucky
courts’ decisions to grant River City the right to foreclose on the Setrees’ Kentucky properties necessarily included
a determination of default under the 2007 Note—the issue before the trial court,” she continued.

“Although the Kentucky cases concerned different mortgages and different property than the instant cause, they litigated
the same issues between the same parties: the Setrees’ failure to pay the Indiana taxes on the Cardinal Lane Property
and the Setrees’ right to cure its failure under the 2007 Note. Therefore, granting the Kentucky judgments full faith
and credit, we are precluded from addressing the Setrees’ claim.”

ADVERTISEMENT

Conversations

2 Comments

Did Indiana legislature expect a KY court to remove the contractal requiremnt of INdiana MOrtgages to contain notice and right
to cure? INside the KY cases is the pleading saying KY requires no Notice of default. The KY court made no determination of
the Indiana Notice and right to cure.

RCB testified it sent no notice and no right to cure in either state. Ky lawyers wrote briefs for the KY commissioner about
the Indiana Mortgage. The KY court determined the quietus money to be unsecured debt. Both KY courts refused to pay the quietus
money out of the proceeds of the land sale. RCB never testified that all conditions precendent were met. The court ignored
the payments accepted by RCB after the foreclosure was filed. RCB business records showed no payments late. I can tell you
RCB intend to add the quietus to the back of the loan. Proved by email and blue ink signature. This is not simple foreclosure,
the bank has unclean hands. The Judge accepted that a letter written by the Setree's more than 10 days after the foreclosure
was filed was Notice from RCB, and rejected the Setree claim that their knowledge and their hand can not be Notice. From what
you read here res judicata is being used because the normal facts in a foreclosure will not let the bank win. I am represented.
We would like to hear your detailed comments. Bob Setree

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or
hateful.

You are legally responsible for what you post and your anonymity is not guaranteed.

Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content
are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.

No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are
relevant to the topic at hand, but please do not link to objectionable material.

We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag
a post simply because you disagree with it.